Small-Box Industrial Demand Remains Strong Amid Overall Decline in IE 

Leasing activity in the Inland Empire’s industrial market has experienced a decline, signaling a correction phase, according to Avison Young. However, demand for smaller-box properties has remained stable.  

Despite a significant decrease in leasing activity for big-box spaces, particularly those between 250,000 and 500,000 square feet, down 54% in the first quarter from Q4 2023, “from the previous quarter, “property tours have remained robust,” Avison Young reported. “However, occupiers have become more discerning in selecting new sites, considering factors such as potential further drops in rental rates, concessions, and future consumer demand to determine their return on investment.”  

An emerging trend is observed in buildings up to 50,000 square feet, where demand remains strong, driven primarily by smaller local logistics and warehouse occupiers. Small-box leases in the Inland Empire have averaged 2.1 million square feet since 2023, a 29% increase compared to the 2022 average. 

“While demand for large-box buildings is expected to rebound, demand for smaller-box buildings is anticipated to remain stable,” said Avison Young. “Contract negotiations at the East Coast ports expiring on Sept. 30th could lead to increased activity at West Coast ports if operators opt to relocate shipments to prevent logistical disruptions. This scenario could heighten warehouse demand in the Inland Empire as occupiers prepare for the upcoming holiday season.” 

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